How to Choose the Best Fixed Rate Loan Term for Your Needs

When choosing the best fixed rate loan term for your needs, consider factors such as your financial goals, income stability, and the length of time you plan to stay in the property or hold the loan.

What is a Fixed Rate Loan?

A Fixed Rate Loan is a loan where the interest rate is guaranteed to remain the same during an initial term (years), regardless of what may occur in the market with variable rates.

Traditionally, lenders have offered terms of between 1 – 5 years for fixed rates, however some Lenders may offer terms of up to 10 years.

Fixed Rate term loans normally require the loan to be renegotiated at the conclusion of the fixed term, thus a five year fixed term loan would normally be required to be repaid in full at the end of year 5.  However, most Lenders have the ability to arrange for the facility to revert to the Standard Variable Rate after the Fixed Rate term has expired.  Therefore, a loan facility can be established for a 25 or 30 year loan term with the first five years, fixed at a specific interest rate.

Can I Have A Fixed And Variable Rate Loan Together?

If you like the idea of a fixed rate and are unsure of the rate fluctuations in the current interest rate market you can split your loan into 2 loans. Fix one portion of the loan and have the other portion at a standard variable rate loan to fluctuate with market rates.

For example; if you have a $500,000 loan, you may wish to split your loan into a $300,000 fixed rate loan and the other portion of $200,000 at a variable rate loan.

By fixing the $300,000 loan you know what the repayments will be every week, fortnight or month over the term (years) of the fixed period. The variable portion will fluctuate in the market conditions & if rate rises your repayments are only higher on the variable rate amount of $200,000 and not on the $300,000 which is fixed.

If the reverse happens with rate dropping, then you’re not locked in on a $500,000 loan fixed at a higher rate as you we enjoy and benefits of a split loan.


Fixed rate loans are not for everyone and you will need good financial advice, therefore talk to us before you lock in a fixed rate.


Let Neomoney help you with a great fixed rate today.

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